Get A Domain Name Without Bankrupting Your Startup

Martin Zwilling
, ContributorI provide pragmatic advice and services to entrepreneurs and startups.Opinions expressed by Forbes Contributors are their own.

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I’m sure you have all been frustrated at least once by not being able to get the Internet domain name you want for your company. Who owns all of these names, and should you ever buy one for a premium? The simple answer is that if you want to be found on the Web, the perfect domain name can be well worth a few thousand dollars, but don’t pay a fortune for one.

The market for domain investors has been in the doldrums for the last few years, since the Internet Corporation for Assigned Names and Numbers (ICANN) has rolled out top-level domains for every country, like .us and .me, as well as allowing companies to set up their own top-level domains. For instance, Cisco has applied to use URLs ending in .cisco.

Gone are the days when people like Frank Schilling and Kevin Ham built $300 million empires by speculating on premium domain names, since the possibilities are now endless. Only one sold for 7 figures in 2012 (investing.com sold for $2.5 million), and the average is now down to below $5,000. The current record was set in 2010, when sex.com sold for $13 million.

The right place to start is to target today's average of approximately $8-$10 per year for a .com domain name from GoDaddy or one of the hundreds of other domain name registrars. Certain extensions such as .tv and .vs range in the $20 to $40 range for a year registration, but you can find sales on certain extensions for as little as fifty cents per year.

So how do you decide if you should be looking at the low end or the high end of these ranges? I suggest following these steps to get the name you need for your business:

First pick the right company and matching domain name. The names don’t have to match, but it sure makes branding and recognition easier if they are at least similar. Starting and name a company today is a world-wide decision. Make sure the names don’t have negative and even obscene connotations in another language.

Register the name and related suffixes, if available. Registration of the domain name is easy and simple through most hosting sites, if nobody already owns it. It's a good idea to also buy between three and twenty names with spellings and suffixes that are close to your primary address, or that could be confused with it.

Rename your company to match an available domain name. With today’s pervasive Internet searching and shopping, the domain name may well be more important than your company name. As a startup, cost to rename your company and change existing collateral may be less than dealing with unmatched names or premium domain pricing.

Otherwise, find the owner. With150 million names already in use, chances are someone else may have already snagged your favorite. First you have to find the current owner, using Domain Tools, or other lookup functions available on the net. Ask if the domain name is for sale, but don’t tip your hand by making a specific offer.

Negotiate for the name. Contemplate your available budget, the potential value of the name to you, and the range of possible prices mentioned above. Then decide whether you are game to complete the negotiation yourself, or whether you should consider an intermediary, like Moniker.com, and expect to pay a $250 to $500 fee.

Consider leasing or lease to own. If the price is too high, work with the domain name owner to agree on a “lease-to-own” deal for the domain name. This will allow your company to build some assets before committing the capital. Prices may continue down, or in the worst case, you won’t need the name for the long term.

Get the agreement in writing as quickly as possible. Once you have a deal, immediately open up an escrow account, like Escrow.com. The faster you fund the account the better chance you have of the seller not being able to back out. Remember that many domain moguls don’t have a sterling reputation, so no handshake deals.

Whether by crafting a great new name or wresting one from a previous owner, every new business needs to master the domain game early, and it need not break the bank. Spending big money up front, or changing domains down the line are both painful and costly. Have you done the proper homework on your preferred domain name?